(TH)
On June 15, when Mukesh Ambani, along with his partner BP plc, announced his return to the oil and gas business after a lag of almost six years, with a huge investment in the controversial KG D6 block, he said: “The new policies that have been announced have facilitated this investment.”
Before making that announcement last week, Ambani’s Reliance Industries Ltd (RIL) and BP decided to drop the arbitration against the Centre on the gas price which their joint venture was was getting from the producing fields (D1 and D3) of the D6 block. In an emailed response to BusinessLine, BP said: “Yes, the gas price arbitration has already been withdrawn.”
The reason for doing this was simple. If RIL and BP wanted to enjoy the benefits of the Centre’s decision of marketing and pricing freedom for gas to be produced from discoveries in high pressure-high temperature, deepwater and ultra deepwater areas, they had to drop the arbitration.
According to government guidelines, the marketing and pricing freedom will be applicable to future discoveries as well as existing discoveries yet to commence commercial production as on January 1, 2016. However, in the latter instance, the guidelines said, if there is pending arbitration or litigation filed by the contractors directly pertaining to pricing covering such fields, the benefit shall be extended only on the conclusion/withdrawal of such litigation/arbitration and the attendant legal proceedings.
